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Bad news is good news, it's often said in financial markets. But that adage applies mainly if the news is bad enough. Only developments dire enough to elicit an effective response by monetary or fiscal policy makers can be counted as good news for bulls.

April's employment data, while assuredly worse than expected, failed to come up to the catastrophic standards that would impel the Federal Reserve to institute further monetary stimulus measures -- at least not yet. With the U.S. economy merely limping along and the omnipresent risks posed by the European debt crisis, exacerbated by elections in France and Greece over the weekend, investors fled risk assets such as stocks and took refuge in government securities that provide vanishingly low yields.

U.S. Treasuries rallied Friday on news of an anemic 115,000 increase in nonfarm payrolls for April, about two-thirds of the consensus gain forecast by economists, extending the decline of the past month and a half. While equities slid sharply, the 10-year note yield dropped to 1.88%, about 50 basis points, or a half percentage point, below its March peak. Yields had risen sharply then on sentiment the Fed not only would be averse to further stimulus, but might even back away from its stated intent of maintaining its key federal-funds rate target at 0-0.25% through late 2014. That increase in yields effectively has been unwound in the wake of the generally lackluster economic data released since then.

Delving into the jobs report, the weaker-than-expected April payroll gain was offset by revisions that lifted the tally by 53,000. In addition, the unemployment rate actually dipped by 0.1 of a percentage point, to 8.1%, which no informed observer would be deluded into thinking was an indication of an improving labor market. The jobless rate, which is derived by a survey of households separate from the polling of business establishments that provides the payroll numbers, fell because of a 0.2% shrinkage in the labor force. The household survey found fewer people holding down jobs last month (the numerator in the unemployment rate). But because the labor force (the denominator) shrank owing to dropouts among the ranks of job seekers, the jobless rate dipped.

What more can the Fed can do to put folks on payrolls at this point is unclear given interest rates already at historic lows. Meanwhile, on the fiscal front, governments at all levels have been shedding workers steadily while state and local governments face ongoing budget pressures when most begin new fiscal years July 1. Then there's the widely advertised federal fiscal cliff next Jan. 1, when the Bush tax cuts are due to expire and spending cuts take effect that will slice several percentage points from 2013 gross domestic product -- unless Congress acts.

GIVEN THIS MISERABLE STATE OF AFFAIRS, investors are accepting yields that are well below the Fed's 2% stated inflation target. Not only are real yields negative on the 10-year Treasury, but the five-year note yields just 0.78% and the two-year note yields 0.26%. Meanwhile, the 30-year bond yields just 3.07%.

This isn't just an American phenomenon. German 10-year bund yields hit a record low of 1.58% Friday ahead of the balloting in France and Greece. And to show what happens in the wake of the bursting of a credit bubble, 10-year Japanese government bonds yield 0.89%.

The U.S. Treasury market is a testament to how lousy things are -- and the lack of available policy responses. Nobody buys Treasuries for yield; they buy them in spite of it. Think of them as parking places for your wealth. New Yorkers are resigned to paying 50 bucks or more to park for an evening in Manhattan to make sure their car isn't towed away or worse. Even if it's costly in real terms, investors know they'll get their money back in Treasuries.